Tuesday, March 21, 2017


This was supposed to be yesterday's effort, but right in the middle in walks the kitchen lady and two hours lady the Muses had left town.  I pick up today...

The old saying that what goes around comes around also applies to people.  The NYT reported today that Adam Lerrick, a well-know conservative economist, late of the investment banking business and presently of the American Enterprise Institute, is about to be appointed Deputy Under Secretary for International Affairs, reporting to no lesser a mortal than David Malpass who is to oversee all things international at Treasury.   David is a lively figure; once the head economist at the little moarned house of Bear Sterns, he earned the nickname of "Punto," when he announced to all and sundry in 1983 that, "Mexico will never devalue, Punto!"  Mexico promptly devalued.  There was a rumor that Bear was a tad long the Peso and while there were no bodies laying in the middle of Park Avenue around 46th. street, there were no brass bands either.  Anyway, just a short tale from the last century's book of international finance.

Since then Punto has moved on in the world and so has Mr. Lerrick.  I kinda like ol' Adam as he represents a couple of principals I hold rather dear: markets are not free and capitalism is not capitalism unless people are allowed to lose money.  The second principal is that the IMF is a total waste of time when it gets into anything much beyond its original mandate of assisting developing economies.  Problem is principals don't always work in the real world and for a long time now Mr. Lerrick has had a hard time distinguishing between the two states.  In the real world a government...let's say Mexico again...finds it rather useful to impose unpopular but necessary economic measures upon its citizens with the explanation that "the devil (IMF) made me do it!"  Usually, I might add in exchange for a bucketful of money.  Unfortunately, in the real world the IMF often winds up picking winners and losers and in the real world whenever a "winner" might be associated in some way with an entity that funds the IMF...such as a German or French bank owed money by Greece.  Dogma is great for priests and rabbis; it's a lot harder for simple financial practitioners.  It's going to be interesting to see the reaction of this true believer...and his boss...in the intersection of dogma with real life...as a practitioners.

Tuesday.  Everything went to hell today as it appears that the health care bill might be in real trouble and if that's the case so is the thought of tax reform.  Thoughts that what has happened in the equity markets has not been a Trump rally, or to be more accurate a Trump legislative rally, were put to rest today.  As predicted, if the promised tax reform stalls, look out below.  I don't think I've ever seen a "directional trade"so totally dependent on the politics of the country...or to be more accurate...the politics of one party!  But of course if you guess right you can really make a bomb.  Then again you can buy a lottery ticket.  The opportunities are endless.

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